Carbon Credits and Environmental Sustainability in India: Opportunities, Challenges, and Policy Implications

Abstract

As India grapples with the dual challenge of economic growth and environmental sustainability, carbon credit mechanisms have emerged as a strategic tool to mitigate greenhouse gas (GHG) emissions while fostering sustainable development. This paper explores India's engagement with carbon credit systems, assessing their opportunities, challenges, and policy implications. It provides an in-depth analysis of India’s participation in global carbon credit markets, particularly through Clean Development Mechanism (CDM) projects, and examines sector specific contributions, including renewable energy, afforestation, waste management, and energy efficiency. The findings indicate that while India has made substantial progress in leveraging carbon credits, significant challenges persist, including regulatory uncertainties, market volatility, verification complexities, and sustainability concerns. To optimize the benefits of carbon credit systems, the paper highlights the need for a robust regulatory framework, transparent verification mechanisms, enhanced private sector participation, and alignment with global climate strategies. Strengthening India's carbon credit market will not only support its climate commitments under the Paris Agreement but also drive economic innovation and position the country as a leader in sustainable development.